The Income Tax Appellate Tribunal (ITAT), Mumbai, has ruled that journalist Rana Ayyub’s COVID-19 donation campaigns raised over ₹2.7 crore in taxable income, rejecting her claim that the funds were used entirely for charitable purposes. The Tribunal upheld the tax department’s invocation of Section 56(2)(x) of the Income Tax Act, 1961, and supported the swift action taken under Section 175 to prevent asset disposal.
The amount in question, ₹2.69 crore, including ₹80.5 lakh in foreign contributions, was collected through crowdfunding platform Ketto between 2020 and 2021. The stated intent was to provide pandemic relief, support migrant workers, and aid healthcare and flood relief efforts. However, the Tribunal found that the funds were not handled transparently.
The ITAT highlighted that the donations were routed through Ayyub’s personal savings account and those of her father and sister, without the involvement of any registered charitable trust or legal entity. Of the total sum raised, only ₹28 lakh could be directly linked to relief efforts, while ₹50 lakh was invested in a fixed deposit in her name, and ₹19 lakh was reportedly spent on personal expenses.
The tax department, citing possible evasion, invoked Section 175 of the Act in July 2021, which allows for immediate tax assessment if there’s risk of asset concealment. Ayyub’s lawyers argued that the tax should apply only to income received before the notice was issued. The Tribunal, however, disagreed, stating the department’s action was justified due to the “intermingling of personal and donation funds.”
The bench observed, “If the intention of the assessee was pious then, what explanation she could offer for purchasing fixed deposit receipts of ₹50,00,000/- in her personal name. From the first campaign, the assessee raised ₹1,23,12,484/- out of which ₹68,84,560/- was in Indian currency and ₹54,27,924/- in foreign currency converted into INR.”
The Tribunal noted that nearly ₹2.4 crore remained unutilized in personal accounts at the time of the probe. “When the assessee realised that she has been cornered in the tax net, she returned funds received from foreign reserves from Ketto platform but even after the passage of almost one year from the first donation campaign in which the assessee garnered ₹1.23 Crores approximately, she could only produce evidence of ₹18,00,000/- of relief expenditure,” it said.
Ayyub has denied misusing the funds, claiming a portion was spent on returning migrant workers home and providing medical and food assistance. After being summoned under Section 131 of the Act, she returned ₹70 lakh in foreign donations through Ketto, stating these were not withdrawn personally. However, the Tribunal concluded that the refund appeared to be a response to the investigation and did not negate personal benefit.
The ITAT also flagged a possible violation of the Foreign Contribution Regulation Act (FCRA), 2010, noting that “journalists are not allowed to receive foreign contributions” under Section 3(1)(h). It stated that “by using her father’s and sister’s accounts to accept international donations, the assessee appeared to be circumventing this restriction.”
Furthermore, the Tribunal said, “When confronted with this, the assessee took a plea that the same has been kept in reserve for constructing a hospital which was never mentioned during the fund-raising campaign.”
All three of Ayyub’s appeals for the assessment years 2021–22 and 2022–23 were dismissed. The ruling adds to ongoing scrutiny around crowdfunding transparency and tax obligations for individuals raising large sums for public causes.
(With inputs from Lawbeat)
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